The auto industry plays a vital role in China’s economy. Normally China’s sales would be over 6 million new cars this year. But this year due to COVID 19 pandemic sales are around 3.7 million. To deal with this the Chinese government is giving cash to help the world’s biggest auto market get back on.
According to the China Association of Automobile Manufacturers, car sales declined in 2020. And this is 42% as compared to last year. The auto industry generates over $1 trillion in revenue each year. This is around 10% of China’s manufacturing output.
Car production now restarts in China, even Wuhan also ended its 76-day lockdown last week.
But gaining consumers for new cars again is harder and challenging now. “While the supply chain disruption by coronavirus is surely a headache for automakers. Plummeting demand could be even more life-threatening after two consecutive years of sales contraction in China,” said Alicia García-Herrero, chief Asia Pacific economist at Natixis, in a recent research note.
CAAM said in a statement on Friday that as automakers restart production. Now the industry’s “primary issue” and an “urgent need” are boosting sales.
China is taking steps to increase sales:
Beijing announced tax breaks for new energy vehicles.
Local governments have encouraged people to buy cars by offering cash grants of over $1,400 per vehicle.
CPCA Secretary-General said, China’s Labor Day holiday in May will last five days in 2020. He’s hoping the long holiday traveling desire could boost sales.